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DFC Global Beats Earnings Est., Lags YoY

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DFC Global Corp. reported operating earnings of 24 cents per share for the fiscal third quarter 2013 (ending Mar 31, 2013), which surpassed the Zacks Consensus Estimate of 22 cents per share. However, results lagged the year-ago earnings of 54 cents per share by 55.6%.

Including for one-time charges, DFC Global incurred a net loss of $36.4 million or 86 cents in the fiscal third quarter 2013. The company reported a net income of $31.8 million or 70 cents per share in the year-ago period.

Quarterly Operational Update

Total revenue for the quarter climbed 5.8% year over year on a constant currency basis to $283.6 million. Higher consumer lending revenues (up 12.5% year over year on a constant currency basis) along with slight improvement in pawn service fees and sales (up 1.2% year over year on a constant currency basis) aided the upside. However, results were behind the Zacks Consensus Estimate by 2.4%.

Operating expenses escalated 21% year over year to $210.7 million. Increase in expenses were due to higher salaries and benefits, provision for loan losses, occupancy costs, advertising expenses, depreciation, bank charges and armored carrier services, maintenance and repairs, and other costs.

The extent of increase in operating expenses offset the increase in revenue, thereby pulling down operating income by 23.9% year over year to $72.9 million in the reported quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $55.1 million, down 27.7% year over year.

Share Repurchase Update

During the quarter, DFC Global bought back 0.23 million shares for approximately $4 million, at an average share price of $17.26. As of Apr 1, 2013, DFC Global is left with 2.2 million shares under its share repurchase authorization.

Financial Position

DFC Global exited the quarter with cash and cash equivalents of $207.3 million, down 7.5% from $224 million at year-end fiscal 2012.

Long-term debt of the company increased 4% from fiscal 2012 end level to $976.5 million as of Mar 31, 2013. Debt-to-capital ratio of DFC Global as of Mar 31, 2013 was 70%, up 120 basis points from 68.8% at Jun 30, 2012.

At Mar 31, 2013, DFC Global had drawn $22.6 million from its $235 million global revolving credit facility. The company had also drawn £5.3 million of its £6.0 million credit facilities in the U.K., and SEK 30.0 million and EUR 12.7 million of its respective SEK 125.0 million and EUR 18.8 million credit facilities in Scandinavia.

2013 Guidance

DFC Global reconfirmed its earnings guidance for fiscal 2013. Excluding any one-time charges or gains that may occur, the non-cash impact of ASC-470-20, and the non-cash amortization associated with the legacy cross-currency interest rate swap agreements, operating earnings are expected to be in the range of $1.70–$1.80 per share.

Performance of Other Financial Services Companies

American Express Co. (AXP - Analyst Report), also known as AmEx, reported its first-quarter 2013 operating earnings per share of $1.15. The result comfortably surpassed the Zacks Consensus Estimate of $1.11 and the year-ago quarter earnings of $1.07 a share.

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